Opinion: Is It Time to Cash in on Charter Schools? I Don’t Think So

According to the rhetoric of anti-education reformers, charter schools are right up there with iPhones as a shortcut to gazillions of dollars

Laura Waters

In 1967’s classic film, “The Graduate,” young Benjamin (the graduate of the title) is given some advice by a friend of his father’s who wants to make sure the boy cashes in on a burgeoning business opportunity.

Mr. McGuire: I just want to say one word to you. Just one word.

Benjamin: Yes, sir.

Mr. McGuire: Are you listening?

Benjamin: Yes, I am.

Mr. McGuire: Plastics.

If “The Graduate” were being filmed today, however, Mr. McGuire would offer two words of advice: charter schools.

That punch line owes everything to anti-education reformers, who are escalating the rhetoric around one of their most successful talking points. To wit: charter school advocates and operators are in it for the money, gold-diggers chasing the next iPad or hula-hoop on their way to investment heaven.

There are two holes in this theory: public schools already rely on the private sector -- no untapped market there -- and charter schools are a terrible business model.

But you’ve got to hand it to those who fear the loss of market share for traditional public schools: They’ve got a great talking point and know how to work it.

Last week, for example, AFT President Randi Weingarten bemoaned a “Wal-Mart-ization of American education” that “[drains] funds from students” through “corporate-style education policies in order to bring Wal-Mart's business model to classrooms across the country.”

Former NEA President Dennis Van Roekel alleges that proponents for school choice “look at our investment in public education, and they see a treasure chest.” Education reform critic Diane Ravitch warns (daily, hourly) that school reform efforts are “funded by billionaires and philanthropists who believe in the free market and scorn government regulations. She fumes, “the privatization agenda excites the interest of edu-entrepreneurs, who see it as a golden opportunity to make money.”

For clarity’s sake, let’s limit this discussion to nonprofit charter schools and leave out New Jersey’s three for-profits: Newark Prep, Camden Community Charter School, and Central Jersey Arts Charter School, which serve only 2 percent of New Jersey’s 30,000 charter school students.

America’s public elementary and secondary schools, traditional and charter, have always relied on the for-profit sector. While any school’s primary resource is people -- teachers, administrators, assistants, nurses, Child Study Teams, children -- just about every nonhuman item come from for-profit industries. Schools buy desks, technology, cleaning supplies, whiteboards, books, testing materials, transportation, and Internet access from private suppliers. They contract with for-profit engineers, architects, consultants, and legal firms. Some New Jersey public schools are starting to outsource janitorial services, nurses, and substitute teachers. Public schools couldn’t function without the private sector. In this sense, public schools are already “privatized.”

Many local districts also rely on a variety of privately funded organizations to augment their tight budgets, including education foundations, philanthropies, businesses, even PTOs. There is nothing unethical about this practice; one need only recall the development of America’s robust library system, mostly paid for by steel business magnate Andrew Carnegie. I don’t know anyone who complains about the corporatization of American libraries.

What’s more, nonprofit, brick-and-mortar charter schools are terrible business models. According to a white paper by the National Education Association, the “economies of scale don't apply to the business of schooling. Economies of scale work in industries with uniform products. But as noted above, schooling is not one-design-fits-all, and individual school faculties and communities want input into their schools.” The NEA analysts study the debacle of Chris Whittle’s Edison Schools, a for-profit national school venture that went bust, and conclude, “in the end, the market metaphor does not apply to public education.”

When the Gordon Gekkos of the world look for investment opportunities, they look for scalability, which means that the business can multiply revenue with minimal incremental cost. But schools are all about people, not hula hoops. In most schools, about 75 percent of total revenue goes to payroll and benefits, and more goes to fixed costs like energy and transportation. Not much profit margin there.

In addition, every state has its own charter laws, application processes, accountability rubrics, governance regulations, and teacher certification requirements. Effective charter schools in one state don’t translate over the state line.

There is one way to make a scalable business out of education, although here we’re in the realm of higher education, not K-12. Online universities are reaping dividends for investors for exactly the reasons that preclude nonprofit charter school profit. Talk about scalable: there’s no state oversight, and little federal either, although the Obama administration has started to poke around a bit. No full-time faculty -- almost all are adjunct -- no building maintenance, energy, transportation requirements.

Here’s a measure of this business model’s success: the U.S. Department of Education ranks the popularity of colleges that offer master’s degrees in education. Among the top 10 most popular schools, eight are for-profit and six are on-line, providing almost 25 percent of all graduate teaching degrees across the country.

Those are facts, not talking points. The Huffington Post recently published an article called “Big Profits for Not-for-Profit Charter Schools” by Alan Singer. The sole source of “big profit” was salaries earned by top charter executives like Eva Moscowitz of Successful Academy Charter Schools. Moscowitz earns $485K, a tidy sum. One could also point to salaries of top union executives. Last year NEA’s Van Roekel made $411K and AFT’s Weingarten made $543K. Now, Benjamin, that’s a lot of plastic.

Laura Waters writes about education politics and policy for NJ Spotlight and other publications. She also blogs at NJ Left Behind and has been a school board member in Lawrence Township (Mercer County) for 10 years.